Warren Buffett, the Oracle of Omaha, came out recently with a rather controversial statement
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.
Ummm, OK. That's nice of you to offer, Warren. I wonder how many of your millionaire/billionaire friends are on the same page with you on this.
Sadly, Warren doesn't put his money where his mouth is, making him a very rich hypocrite with wonderful-sounding but ultimately empty rhetoric. David S. Logan, writing on the Tax Foundation's Tax Blog , notes
Mr. Buffett chose to leave most of his fortune to the Bill & Melinda Gates Foundation and, thus, avoided an estate tax that could potentially give 55 percent of his wealth to Uncle Sam. Moreover, keeping that wealth actively working in the private sector would generate deficit reducing tax revenues indefinitely.
Logan goes on to deconstruct the faulty thinking behind Warren's generous offer
Mr. Buffett seems to forget that capital gains and dividends taxes are a double tax on corporate income. Before it gives out a dollar in dividends, Berkshire Hathaway - like all U.S. corporations - must first pay a 35 percent federal corporate income tax, one of the highest in the world. Then, shareholders pay the individual tax rate of 15 percent on their dividend income or the gains from appreciated stock. As a result, the combined tax rate of 50 percent is the 4th highest combined dividend rate in the industrialized world. Ironically, we had the 8th highest combined rate under Bill Clinton.In his op-ed, Mr. Buffett suggests that increasing taxes on the rich ensures that they pay their fair share. Perhaps, but while the top 1 percent of taxpayers earn 20 percent of the nation's income, they currently pay nearly 40 percent of the income taxes. That's a greater share of the burden than the bottom 90 percent combined (that's everyone earning under $100,000 by the way). Let's not forget that when the top marginal income tax rate was 70 percent in 1980, the rich paid 20 percent of all income taxes. Yet now, when the top marginal rate is 35 percent they pay twice that. Finally, while the tax burden on the rich has been growing, the burden on low and middle-income Americans has been shrinking. By most accounts, roughly 50 percent of American households pay no income tax at all. Indeed, the IRS will give out roughly $110 billion in "refundable" tax credits this year to households that pay no income taxes.
Scott Hodge, also writing for the Tax Foundation , elaborates on the notion that the "wealthy" aren't paying enough
Recently released IRS data for 2009, shows that taxpayers earning over $200,000 paid 50 percent of the $866 billion in total income taxes paid that year, or $434 billion. Skeptics will say, "That's because they earn the majority of the income in America. Not so. These taxpayers earned 25 percent of the $7.6 trillion in total adjusted gross income in the country that year. The 2009 IRS data also shows that a record 58.6 million tax filers had no income tax liability that year. This means that 42 percent of the 140 million Americans who filed tax returns that year contributed nothing to the basic cost of government.
I have to believe the "rich" are doing more than their fair share. In fact, they are covering the nearly half of the country that pays nothing at all. How much more should they pay? Review the facts above before you answer that.
But the nation is in dire straights, with horrendous debt, and the "rich" are holding out on us need to do their fair share to help the nation. Sadly, the United States has hemorrhaged so much money so quickly, the "rich" could not even begin to bail her out. Again from the Tax Foundation's Logan
So taking half of the yearly income from every person making between one and ten million dollars would only decrease the nation's debt by 1%. Even taking every last penny from every individual making more than $10 million per year would only reduce the nation's deficit by 12 percent and the debt by 2 percent. There's simply not enough wealth in the community of the rich to erase this country's problems by waving some magic tax wand.
Finally, to put everything in perspective, think about what would need to be done to erase the federal deficit this year: After everyone making more than $200,000/year has paid taxes, the IRS would need to takeevery single penny of disposable income they have left. Such an act would raise approximately $1.53 trillion. It may be economically ruinous, but at least this proposal would actually solve the problem.
But, we're missing something. Those to the Left of center, whose numbers include hypocritical billionaires, it seems, aren't interested in fixing anything, such as paying off the debt. Just what do they want?
. . . First place aversion arises from progressives’ moral view that requires them to help everyone– you can never reduce carbon emissions enough, donate to the poor enough, elevate support minorities enough, etc– and holding themselves accountable for failing their moral obligations. And they fail all the time because progressives like nice, expensive cars, clothes, food, yoga studios, Martha’s Vineyard, etc, much too much to abide their moral world view. That moral deficiency causes them to
Appoint others who force [others to pay taxes] and contribute to ending every harm; forgiven and made worthy, they ignore that their appointees often harm the poor and force others not afflicted by First Place Aversion to pay; and
Steal and sully the poor’s lack of culpability for all the wrongs that rich progressives can’t fix by paying them off with other people’s money.
In other words, rich progressives need to feel good about themselves, perhaps to assuage their guilt over being wealthy in the first place. But instead of getting down and dirty themselves, they do their "good" by forcing others to cough it up. In the meantime, they totally ignore what makes the poor, ummm, poor.
It is beyond the scope of this post to discuss the latter issue. Suffice it to say, in many cases (but certainly not all), those in poverty have landed there by making incredibly bad decisions. Alcohol and drugs are big players in this, but simple lack of discipline is right up there, too. You've seen people in line at the grocery paying for food with their WIC card, while chatting away on their iPhones, wearing $200 sneakers, and draped in gold. These people can be white, black, Hispanic, or whatever, so don't accuse me of racism. And don't accuse me of lying, either, as you've seen this, too. These people are "poor" because they can't stop spending money on the non-necessities of life, and they have been trained by the sympathetic, hypocritical Left to expect the rest of us to cover their chit in life.
I believe strongly in charity, in helping those who NEED help. I tried to cast my views in the light of the Jewish approach to charity relative to the Health Care Abomination in THIS post, and my feelings haven't changed. The approach of the Left has nothing to do with helping anyone. It is simply a drive for power and control. It pits rich against rich and rich against poor in hopes of confiscating from the former and buying off the latter. There is no thought of raising the poor out of poverty, but rather keeping them just happy enough that they don't realize what has been done to them.
I've heard angry Leftists rail against the "rich", with the implication that the rich got that way off the backs of the poor, and that they owe it to the poor to take care of them. Perhaps this is true in a few situations, but these are few and far between. Buffett himself became very wealthy by making shrewd investment decisions, evaluating the companies he bought with data available to anyone who can read, especially in this day and age of universal information brought to you via the Internet. Who did he steal from? No one. Why is he wailing about the low tax rates of the ultra-rich? I guess it makes him feel better. Old Warren may not have been the most moral fellow in his younger days, and he might think he has to make things right with God. Whatever floats his boat. But it's very hard to get around his hypocrisy. He bleats from his bully pulpit, all the while avoiding every last bit of tax possible. If he feels so strongly about this, he could make a much more powerful statement by writing a very large check to the IRS. (If you are so inclined, go straight to Pay.gov , and give until it hurts. Hurts YOU, that is.)
I've noticed that Warren's Berkshire Hathaway hasn't done so well lately
Maybe Warren is worried about joining the ranks of the poor himself?